Recently, among people involved in DeFi, discussions about Uniswap V4 have been increasing, so I’ve organized the differences from V3.

Uniswap itself is a protocol that is constantly evolving among DEXs, but the concentrated liquidity mechanism introduced in V3 was truly a game-changer. Before that, liquidity providers had to allocate assets across all price ranges, but from V3, they could concentrate within a specific price range they set. This significantly improved capital efficiency.

And V4. This is a different level altogether, bringing a new design philosophy called singleton contract architecture. With mechanisms like flash accounting and hooks, developers can customize the protocol’s behavior. In other words, they gained the flexibility to add new features without touching the core protocol.

In terms of gas efficiency, V4 also has advantages. By utilizing transient storage and EIP-1153, on-chain costs are greatly reduced. It’s a subtle point but very important for users prioritizing scalability.

However, whether Uniswap V3 or V4 is better suited depends on how you use it.

V3 is suitable for liquidity providers who want to provide liquidity efficiently. Especially traders familiar with price range strategies and capital optimization can make good profits using V3’s mechanisms. Plus, it’s already proven and has a broad user base. It’s easy for beginners to start with, and liquidity is deep.

V4 is more for developers and advanced users seeking high customization. If you want to implement advanced features like limit orders or dynamic fees, V4’s modular design really shines. However, this also requires a deeper technical understanding.

A common question is, “Which should a beginner choose?” Honestly, starting with V3 is safer. It’s simple, easy to understand, and already mature in the market. On the other hand, V4 has high potential but is more effective if you have deeper technical knowledge.

In terms of gas efficiency, V4 is clearly superior. The combination of EIP-1153 and transient storage reduces transaction costs.

Regarding limit orders, using V4’s hook system allows on-chain limit orders to be implemented without modifying the core protocol. This offers developers significant freedom.

In conclusion, Uniswap V3 is a version that balances stability and efficiency. V4 is aimed at those seeking scalability and innovation. Choosing based on your needs and technical level is the best approach.